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AFTER INTERNAL MARKET measures sprung to life in late May, the stock market broke out to the upside on June 1. But even with rather nice looking price action that day, the bulls have made zero progress since then.

This flat performance in June doesn't bode well for a lasting bull market. Still, until proved otherwise, the bulls, not the bears, have the ball.

There are two schools of thought on what this means. The first is the old Wall Street saw, "never short a dull market." Indeed, with shrinking volume and tight daily trading ranges, it does appear that the market is preparing another attempt to rally.

In technical classrooms, such diminished activity or, for lack of a better term, boring trading, tells us that the market is storing energy. On the charts, price action is coiling tighter like a spring and eventually that spring is going to uncoil.

Given that the trend from March is still up and market breadth is still pretty good, conventional wisdom of not selling this market short seems very reasonable. And faced with the same breakout from a similar trading range as we saw in May, I would make the same call -- more upside.

However, I want to reiterate what I wrote last week that despite the breakout, upside potential was limited (see Getting Technical, "More Room for Bulls to Roam," June 1, 2009). For the Standard & Poor's 500, the May trading range suggested an upside target of 982, a mere 4.5% from the middle of the past week's range (see Chart 1).

Chart 1

On the negative side, the public is getting a bit too comfortable with the stock market's amazing recovery off its March lows. While everyone remains fixated on the Chicago Board Options Exchange volatility index (the VIX), I think it is telling us very little. Such sentiment indicators give us signals only when they move into extreme high or low territory. With a 51-week range of 19-90, in round numbers, the current reading near 28 is quite comfortably ensconced in mediocrity.

But there are at least two sentiment surveys that have moved to rather bullish readings. For contrarians, this could spell trouble for the market.

The American Association of Individual Investors survey reached 47.5% bulls in the latest poll taken for June 3. Compare this to its long-term average of 39% bulls, and we can see that investors have fully embraced the rally.

To be sure, this survey has yielded bullish percentages into the 70% range at major tops, and in October 2007 it checked in at 54% bullish. We cannot call the current reading extreme, but it is well above average to suggest that the parade of good news is required to keep things going.

For a more professional take, the Investors Intelligence advisors survey's "bull ratio" has reached 67%, which is the highest since December 2007. In other words, professional advisors are as bullish on stocks now as they were in 2007 before the young bear market had shown itself. Major chart support as well as both major trendlines guiding the bull market from 2003 and 2004, respectively, were all still intact.

For a chart watcher, the June battle between bulls and bears is more confusing than its May counterpart. The breakout from the May range is still a valid signal, and the trend from the March low is still in force.

However, the quickness that market participants have embraced the bull run seems to be far ahead of what has actually happened. True, the rally has been remarkable and rallies off major bear-market lows do indeed provide such stunning returns. But to see a switch flipped to "buy, buy, buy" after a 30%-40% rally instead of when prices were truly cheap makes me very leery. Where is the wall of worry?

Therefore, I am happy to loosely hold on to my recently altered view that the market will give the bulls one more bit of short-term joy. But in the bigger picture, the structure of the market in terms of price movement, sentiment, momentum and all the other goodies that propeller-head technical analysts follow demands further healing. That means it is not up, up and away in Superman vernacular without a serious push lower by the bears first.

Getting Technical Mailbag:Send your questions on technical analysis to us atonline.editors@barrons.com. We'll cover as many as we can, but please remember that we cannot give investment advice.

Michael Kahn, mutual fund co-manager, author of three books on technical analysis, former Chief Technical Analyst for BridgeNews and former director for the Market Technicians Association, also blogs at www.quicktakespro.com/blog.